Is it irrelevant, or will the Upgrade make the Ferguson share price more attractive?

• The chart shows the Ferguson share price since the beginning of 2018.
• AlphaValue upgrades Ferguson to Add, raising the target price to 5590p (from 5546p).
• Consensus summary: 13 Buys, 12 Holds, 1 Sell; Average target: 6374p (Source: Bloomberg).
• Current share price 5077p (at time of writing).
• 3 Oct: Analysts at Numis Securities say Ferguson should maintain its momentum in the coming year though unchanged 2018-19 estimates.
• Shares -21.7% from 2018 highs; +5.15% from 2018 lows; -4.7% year-to date
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Ferguson – An Example

Let’s say you think that Ferguson shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Ferguson using a CFD, at the current price of 5077p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Ferguson share price rises to 6602p September high (+30%). Your profit would be £3000 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 10% from the current price. Ferguson shares continue their downtrend, they fall 10% and hit your stop-loss. Your loss would be £1000.

This is provided for information purposes only. It should not be taken as a recommendation.